Presumptive Taxation Scheme - Part II

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I hope you must have gained some knowledge and understood section 44AD in my previous blog. Now, let us continue the journey forward by understanding section 44ADA of the Act which talks about Presumptive Taxation for Professionals.

The following professions are covered for the purpose of this section:

  • Medical
  • Legal
  • Accountancy
  • Film Artist
  • Engineering
  • Technical Consultancy
  • Architectural
  • Interior Decorator
  • Company Secretary
  • Any other profession which may be notified by CBDT.

A. The Law

B. Example:
Below are the receipts from professional income of individuals for the Financial Year 2020-21.
Determine whether PTS would be applicable in given cases. Also clarify that whether books of accounts would be required to be maintained and whether audit is compulsory.

Also Read: The Concept of Advance Tax 

C. Solution

In the given cases above, only case II would be eligible for the purpose of Presumptive Taxation since the income offered for the purpose of taxes is 66.67%.

You may say that similar is case IV where the declared income is more than 50% but the catch here is that the gross receipts are more than Rs. 50,00,000.
D. Solution to the questions of Part I:
Answer to 1st question: 2 (two)
Answer to 2nd question: 3 (three)

E. Questions
Let's have a few MCQ's in relation to above. Please leave your answers in the comment below:

  • How many Advance Tax instalment are required to be paid under the Presumptive Taxation Scheme?
    1. One
    2. Two
    3. Three
    4. Four
  • Mr. Vikram earned professional income of Rs. 60,00,000 in the financial year 2020-21. Whether can he use the provisions of PTS under section 44ADA?
    1. Yes
    2. No

Also Read: The Big Blow 

I hope by now you must got the basic idea of Presumptive Taxation Scheme under section 44ADA. 
Please put your queries in the comment section below and I shall be happy to answer them.

Disclaimer: These are just basic concepts. However, the applicability of the law shall depend on case to case basis. 

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Thank you for reading!!

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